State Farm Recognizes that Good Faith Requires It to Inform and Assist the Policyholder to Fully Obtain All Benefits
This is a continuation of State Farm Agrees With Chip Merlin Regarding Claims Handling Obligations and State Farm Claims Handling Standards. These are some of the standards, which are the recognized insurance industry obligations of good faith claims handling, that State Farm teachs to its claims adjusters.
An important aspect of this study for adjusters and insurance coverage counsel is that these duties of good faith claims handling are not found in the contract. They are taught as the ethical requirements to which all adjusters must adhere. Again, I applaud State Farm for these written standards and its instructional course.
In all contracts, courts recognize an implied covenant of good faith and fair dealing. It's not written in the contract, but it is implied that in a contract situation, neither party will do anything that will injure the right of the other to receive the benefit of the agreement.
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Insurance is a "business affected with a public interest."The foregoing points suggest certain responsibilities to inform and assist insureds in first party claim situations.
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An insurer should make a reasonable attempt to effectuate prompt, fair and equitable settlements of claims whenever coverage, liability, and damages have become reasonably clear.An insurer should conduct a thorough and comprehensive investigation of claims in order to determine all possible bases for payment of policy benefits. A denial of insurance benefits should be based upon verifiable facts and evidence, and not mere conjecture or supposition.
An insurer should not delay resolution of a claim by requiring an insured to produce information which the insurer already has or can reasonably obtain.
An insurer has an implied duty to resolve a claim once it has acquired enough evidence and information to establish the validity of a claim.
An insurer is required to pursue resolution of insured's claims with reasonable diligence.
Claim investigations should be objective and designed to acquire information that is reasonably related to the claim.
When necessary for claim resolution, an insurer should select objective experts...to assist the insurer in making claim decisions.
Insurers have a duty to disclose policy terms, conditions, and obligations to insureds. (emphasis added)
If you take a company like Citizens that feels it does not have exposure to bad faith claims handling, does the implied concept within their insurance contract still apply?
If so, what can the insured do with them to make them behave more professionally with their insured's that have a claim?
I wonder who makes a decision about "sump pump failure". In my case with State Farm, the sump pump was running during Tropical Storm Lee continously. The problem was that the ground was so saturated from Irene, which arrived only days before that there was simply no place for the water to pump other than back into the house. Yes, it was flooded, yes I know I don't have flood insurance, but certainly the sump pump failed to perform it's job of getting the water out of the basement, and I am insured for sump pump failure. A 6K laminate floor was ruined, and while it was happening State Farm gave me every indication that I would be covered, even encouraging me to buy another dehumdifier, shop vac, and other supplies, and to log my hours clearing out water as we would be paid for them. We stayed up all night to protect our furniture. Then the catastrophe team arrives a month later, assembled from employees that drove in from all over the nation and gave me a stern "no, you are not covered." They can take those commercials where a giant robot crushes a house and shove them as far as I'm concerned. An earthquake, hurricane (72 hours no power), then tropical storm within a month, and no coverage for any of that. I wonder if they cover ANYTHING on a house.